Third Quarter Net Sales Increased 48%
Year-Over-Year to $68.0 Million
Closing of Tyrrells Acquisition Diversifies
Brand Portfolio and Geographic Presence, Adds Talented
International Team and In-house Manufacturing Capabilities
Amplify Snack Brands, Inc. (“Amplify” or the “Company”)
(NYSE:BETR), a leading marketer and manufacturer of branded
better-for-you snack food products, today reported financial
results for the three and nine months ended September 30, 2016.
Three Months Ended September 30, 2016 Highlights
- Net sales were $68.0 million, up 48.1%
year-over-year
- Gross profit was $32.3 million,
representing 47.6% of net sales
- GAAP net income was $1.6 million, or
$0.02 per fully diluted share
- Non-GAAP adjusted net income was $9.0
million, or $0.12 per fully diluted share
- Adjusted EBITDA was $20.1 million,
representing 29.6% of net sales
Nine Months Ended September 30, 2016 Highlights
- Net sales were $182.2 million, up 32.5%
year-over-year
- Gross profit was $93.3 million,
representing 51.2% of net sales
- GAAP net income was $18.8 million, or
$0.25 per fully diluted share
- Non-GAAP adjusted net income was $30.4
million, or $0.40 per fully diluted share
- Adjusted EBITDA was $61.4 million,
representing 33.7% of net sales
“We are very pleased to have completed the Tyrrells acquisition
in the third quarter. Through this transaction, we diversified our
better-for-you snack food offerings, expanded our geographic
presence, and gained a highly-talented international team as well
as in-house manufacturing capabilities,” commented Tom Ennis,
Amplify’s President and Chief Executive Officer. “Strong brand
sales gains continued in the quarter, despite a more challenging
market backdrop, and we experienced certain transitory operational
execution issues that impacted our results. Amplify is now a much
stronger and more diversified company, and we’ve proactively taken
steps to sharpen execution going forward. We remain very excited
about the significant potential we have to leverage our newly
expanded portfolio of terrific better-for-you brands to drive
continued sales growth, profitability and value for our
shareholders.”
Three Months Ended September 30, 2016
Net sales increased 48.1% to $68.0 million compared to $45.9
million for the three months ended September 30, 2015. The increase
in net sales reflects solid growth of the SkinnyPop brand, new
distribution of the Paqui brand, and the addition of the Oatmega
brand. In addition, the Tyrrells international portfolio of brands
which the Company acquired on September 2, 2016 contributed $8.6
million to net sales in the third quarter. The impact of foreign
currency exchange on net sales and earnings in the quarter was
immaterial based on the inclusion of Tyrrells results for a partial
month of the three months ended September 30, 2016.
Gross profit was $32.3 million, or 47.6% of net sales, compared
to $25.7 million, or 55.9% of net sales for the three months ended
September 30, 2015. The decrease in gross margin percentage for the
three months ended September 30, 2016 was primarily due to a higher
level of trade promotional activity, a shift in mix of brand and
customer sales, including the addition of Tyrrells, and a delay in
timing of planned cost savings. The Tyrrells gross margin was 27.1%
for the three months ended September 30, 2016.
GAAP SG&A was $24.9 million compared to $21.2 million for
the third quarter ended September 30, 2015. GAAP net income was
$1.6 million, or $0.02 per fully diluted share, compared to a net
loss of $3.0 million, or a loss of $0.04 per fully diluted share,
for the three months ended September 30, 2015. Adjusted net income,
which is a non-GAAP financial measure used by the Company that
makes certain adjustments to net income calculated under GAAP, was
$9.0 million, or $0.12 per fully diluted share, based on 75.6
million diluted shares outstanding, compared to adjusted net income
of $9.2 million for the three months ended September 30, 2015, or
$0.12 per fully diluted share, based on 75.0 million diluted shares
outstanding.
Adjusted EBITDA, which is a non-GAAP financial measure used by
the Company that makes certain adjustments to net income calculated
under GAAP, increased 11.0% to $20.1 million from $18.1 million for
the three months ended September 30, 2015, primarily reflecting
higher net sales and gross profit, partially offset by higher
Adjusted SG&A. Adjusted SG&A, which is a non-GAAP financial
measure used by the Company that makes certain adjustments to
SG&A calculated under GAAP, was $12.7 million, compared to
Adjusted SG&A of $7.6 million for the three months ended
September 30, 2015. The increase in Adjusted SG&A was primarily
driven by increased consumer marketing activities to drive brand
awareness and customer trial, new costs associated with a full
quarter contribution from Oatmega and a partial month contribution
of Tyrrells, as well as investments in infrastructure and
personnel. As a percentage of net sales, Adjusted EBITDA was 29.6%
compared to 39.4% in the three months ended September 30, 2015.
Nine Months Ended September 30, 2016
Net sales for the nine months ended September 30, 2016 increased
32.5% to $182.2 million, compared to $137.5 million during the nine
months ended September 30, 2015. The increase in net sales reflects
solid growth of the SkinnyPop brand, new distribution of the Paqui
and Oatmega brands, and the addition of the Tyrrells international
portfolio of brands which the Company acquired on September 2,
2016.
GAAP net income increased $13.3 million to $18.8 million, or
$0.25 per fully diluted share, compared to net income of $5.5
million, or $0.07 per fully diluted share, for the nine months
ended September 30, 2015. Adjusted net income, which is a non-GAAP
financial measure used by the Company that makes certain
adjustments to net income calculated under GAAP, was $30.4 million,
or $0.40 per fully diluted share, based on 75.1 million diluted
shares outstanding, compared to adjusted net income of $28.1
million for the nine months ended September 30, 2015, or $0.38 per
fully diluted share, based on 74.7 million diluted shares
outstanding.
Adjusted EBITDA, a non-GAAP financial measure, increased 9.3% to
$61.4 million from $56.1 million for the nine months ended
September 30, 2015. Adjusted EBITDA as a percentage of net sales
for the nine months ended September 30, 2016 was 33.7%, compared to
40.8% for the nine months ended September 30, 2015.
Balance Sheet and Cash Flow
As of September 30, 2016, the Company had cash and cash
equivalents of $17.2 million and net availability under its $50
million revolving line of credit of $44.5 million. Net debt, as
defined under the Company’s credit facility, represents outstanding
indebtedness less cash and cash equivalents, was $596.2 million as
of September 30, 2016, compared to $182.5 million as of December
31, 2015. The increase was primarily attributable to the
acquisition of the Tyrrells portfolio of international brands
during the nine months ended September 30, 2016. Amplify’s leverage
ratio as calculated under the Company’s credit facility increased
to 5.8x trailing twelve month EBITDA at September 30, 2016, up from
2.6x at June 30, 2016. The Company remains committed to reducing
its long-term net leverage to under 4.5x via organic growth, cost
reduction initiatives, and subsequent free cash generation.
Outlook
The Company is updating its full year 2016 outlook to reflect
its year-to-date performance, the September 2, 2016 completion of
the Tyrrells acquisition, and its view of the remainder of the
year. For the full year 2016 the Company now expects to report:
- Net sales of $268 million to $272
million
- Adjusted EBITDA of $84 million to $86
million
- Adjusted EPS of $0.49 to $0.51
- The outlook assumes an estimated
foreign currency exchange rate in the fourth quarter of 1.24
USD:GBP.
Additional details will be provided on the Company’s earnings
call.
The Company has not reconciled its expected Adjusted EBITDA to
net income or Adjusted EPS to earnings per share under “Outlook”
because it has not finalized calculations for several factors
necessary to provide the reconciliations, including net income,
interest expense and income tax expense. In addition, certain items
that impact net income and other reconciling metrics are out of the
Company’s control and/or cannot be reasonably predicted at this
time.
Conference Call and Webcast
The Company will host a conference call with members of the
executive management team to discuss these results today, Monday,
November 14, 2016 at 3:30 p.m. Central time (4:30 p.m. Eastern
time). Investors interested in participating in the live call can
dial 877-407-9039 from the U.S. International callers can dial
201-689-8470.
In addition, the call will be broadcast live over the Internet
hosted at the "Investor Relations" section of the Company's website
at http://amplifysnackbrands.com. The webcast will be archived for
30 days. A telephone replay will be available approximately two
hours after the call concludes and will be available through
Monday, November 28, 2016, by dialing 877-870-5176 from the U.S.,
or 858-384-5517 from international locations, and entering
confirmation code 13647860.
About Amplify Snack Brands, Inc.
Headquartered in Austin, Texas, Amplify Snack Brands is a high
growth snack food company focused on developing and marketing
products that appeal to consumers’ growing preference for
Better-For-You (BFY) snacks. Our brands SkinnyPop®, Tyrrells®,
Paqui® and Oatmega® embody our BFY mission of “snacking without
compromise” and have amassed a loyal customer base across a wide
range of food distribution channels in the United States, United
Kingdom, Canada, Europe and Australia. For additional information,
please visit: http://amplifysnackbrands.com.
Forward-Looking Statements
This press release contains certain forward-looking statements
regarding our performance, including in the section titled
“Outlook.” Forward-looking statements generally relate to future
events or our future financial or operating performance. In some
cases, you can identify forward-looking statements because they
contain words such as “may”, “will”, “should”, “expects”, “plans”,
“anticipates”, “could”, “intends”, “target”, “projects”,
“contemplates”, “believes”, “estimates”, “predicts”, “potential” or
“continue” or the negative of these words or other similar terms or
expressions that concern our expectations, strategy, plans or
intentions. Forward-looking statements are subject to known and
unknown risks and uncertainties and are based on potentially
inaccurate assumptions that could cause actual results to differ
materially from those expected or implied by the forward-looking
statements. If any such risks or uncertainties materialize or if
any of the assumptions prove incorrect, our results could differ
materially from the results expressed or implied by the
forward-looking statements we make.
The important factors that could cause actual results to differ
materially from those in any forward-looking statements include,
but are not limited to, the following: (i) changes in consumer
preferences and discretionary spending may have a material adverse
effect on our brand loyalty, net sales, results of operations and
financial condition, (ii) we rely on sales to a limited number of
distributors and retailers for the substantial majority of our net
sales, and the loss of one or more such distributors or retailers
may harm our business, (iii) sales of a limited number of SkinnyPop
products and flavors contributed all of our historical
profitability and cash flow and a reduction in the sale of our
SkinnyPop products would have a material adverse effect on our
ability to remain profitable and achieve future growth, and (iv)
our ability to successfully integrate the Tyrrells business and our
other recent acquisitions with our existing operations.
Further information on these and other factors that could affect
our financial results and the forward-looking statements in this
press release are included in our Annual Report on Form 10-K for
the year ended December 31, 2015 and our Quarterly Reports on Form
10-Q, as filed with the Securities and Exchange Commission (“SEC”)
and in other filings we will make with the SEC from time to time,
particularly under the caption Risk Factors.
You should not place undue reliance upon forward-looking
statements as predictions of future events. Amplify has based the
forward-looking statements contained in this press release on its
current expectations and projections about future events and trends
that it believes may affect its business, financial condition,
results of operations and prospects. The forward-looking statements
made in this press release relate only to events as of the date on
which the statements are made. Amplify undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as may be required by law.
Non-GAAP Measures
In order to aid understanding of Amplify’s business performance,
it has presented results in conformity with accounting principles
generally accepted in the United States (“GAAP”) and has also
presented Adjusted SG&A, Adjusted EBITDA and Adjusted net
income and the corresponding earnings per share, which are non-GAAP
measures that are explained and reconciled to the comparable GAAP
measures in the tables included in this release.
Management believes that Adjusted SG&A, Adjusted EBITDA and
Adjusted net income and the corresponding earnings per share, which
are non-GAAP measurements, are meaningful to investors because they
provide a view of the Company with respect to ongoing operating
results. Adjusted EBITDA and Adjusted net income are not and should
not be considered alternatives to net income or any other figure
calculated in accordance with GAAP, or as an indicator of operating
performance. The Company’s calculation of Adjusted SG&A,
Adjusted EBITDA and Adjusted net income and the corresponding
earnings per share may differ from methods used by other companies.
Management believes that these non-GAAP measurements are important
to help gain an understanding of the Company's overall operating
results in the periods presented. Such non-GAAP measurements are
not recognized in accordance with GAAP and should not be viewed as
an alternative to GAAP measures of performance. We have not
reconciled our expected Adjusted EBITDA to net income or Adjusted
EPS to earnings per share under “Outlook” because we have not
finalized our calculations of several factors necessary to provide
the reconciliations, including net income, interest expense and
income tax expense. In addition, certain items that impact net
income and other reconciling metrics are out of our control and/or
cannot be reasonably predicted at this time.
Amplify Snack Brands, Inc. and Consolidated Subsidiaries
Condensed Consolidated Balance Sheets (in thousands)
September 30, 2016 December 31,
2015 Assets (unaudited) Current assets: Cash and cash
equivalents $ 17,187 $ 18,751 Accounts receivable, net 39,740
11,977 Inventories 18,943 6,829 Other current assets 8,563
1,293 Total current assets 84,433 38,850 Property and
equipment, net 51,959 2,153 Other assets: Goodwill 177,541 47,421
Intangible assets, net 557,614 269,468 Other non-current assets (1)
55 40
Total assets $ 871,602
$ 357,932 Liabilities and Shareholders’ Equity
Current liabilities: Accounts payable and accrued liabilities $
46,815 $ 14,532 Senior term loan- current portion 6,000 12,750
Founder contingent consideration 2,197 25,197 Tax receivable
obligation- current portion 6,595 6,632 Note payable, net 984 -
Other current liabilities 4,675 217 Total current
liabilities 67,266 59,328 Long-term liabilities: Senior term loan
(1) 572,281 181,704 Revolving credit facility 4,144 - Notes
payable, net 6,642 3,757 Net deferred tax liabilities 62,277 5,115
Tax receivable obligation 89,497 89,498 Other liabilities
5,806 3,107 Total long-term liabilities 740,647 283,181
Total shareholders’ equity 63,689 15,423
Total
liabilities and shareholders’ equity $ 871,602
$ 357,932 (1)
In the first quarter of 2016, the Company
adopted accounting guidance which requires debt issuance costs to
be presented as a reduction to the carrying value of the related
debt liability, rather than as a deferred charge (asset). This
presentation resulted in debt issuance costs being presented in the
same manner that debt discounts have historically been presented.
As a result, the Company reclassified $2.9 million of debt issuance
costs from Other assets to a deduction from the carrying value of
the Senior term loan as of December 31, 2015.
Amplify Snack Brands, Inc. and Consolidated
Subsidiaries Condensed Consolidated Statements of
Operations For the Three and Nine Months Ended September 30,
2016 and 2015 (unaudited, in thousands, except share and per
share data) Three Months Ended
Nine Months Ended September 30, September
30, September 30, September 30,
2016 2015 2016
2015 Net sales $ 67,982 $ 45,914 $ 182,193 $
137,543 Cost of goods sold 35,646 20,260
88,891 60,787
Gross profit
32,336 25,654 93,302 76,756 Operating
expenses: Sales and marketing 8,903 5,146 22,551 13,780 General and
administrative 15,971 16,068 27,688 37,085
Gain on change in fair value of contingent
consideration
(505 ) - (505 ) - Total
operating expenses 24,369 21,214
49,734 50,865
Operating income 7,967
4,440 43,568 25,891 Interest expense 5,636
3,311 11,788 9,324 Other income (4,221 ) - (4,221 ) - Loss on
extinguishment of debt 1,100 -
1,100 - Income before income taxes 5,452 1,129 34,901
16,567 Income tax expense 3,807 4,118
16,086 11,092
Net income (loss)
$ 1,645 $ (2,989 )
$ 18,815 $ 5,475 Earnings
per share:
Basic and diluted $ 0.02
$ (0.04 ) $ 0.25 $
0.07
Weighted average common shares
outstanding:
Basic 75,455,047
74,982,461 75,032,287
74,707,855 Diluted 75,557,760
74,982,461 75,094,446
74,707,855 Amplify Snack Brands, Inc. and
Consolidated Subsidiaries Reconciliation of GAAP Net Income
(Loss) to Adjusted EBITDA and Adjusted Net Income (in
thousands) Three Months Ended
Nine Months Ended September 30, September
30, September 30, September 30,
2016 2015 2016
2015 Net income (loss) $
1,645 $ (2,989 ) $ 18,815
$ 5,475 Non-GAAP adjustments: Interest expense 5,636
3,311 11,788 9,324 Income tax expense 3,807 4,118 16,086 11,092
Depreciation expense 539 98 814 206 Amortization of intangible
assets 1,279 1,064 3,433 3,165 Equity-based compensation expense
1,803 997 3,972 2,435
Gain on change in fair value of contingent
consideration
(505 )
-
(505 )
-
Other income (1) (4,221 ) - (4,221 ) - Loss on extinguishment of
debt 1,100 - 1,100 - Founder contingent compensation - 4,602 -
13,805
Transaction-related expenses: IPO-related expenses
(2) - 6,715 - 9,352
Secondary equity offering-related expenses
(3)
- - 615 - Acquisition-related expenses (4) 9,024 67 9,498 462
Executive recruitment (5) - 127 - 742 Recapitalization expenses (6)
- - - 91
Adjusted EBITDA $ 20,107 $
18,110 $ 61,395 $ 56,149 Less:
Interest expense 5,636 3,311 11,788 9,324 Depreciation expense
539 98 814 206
Adjusted net income before taxes 13,932 14,701
48,793 46,619 Income tax expense above 3,807 4,118
16,086 11,092 Adjustments to income tax expense (7) 1,112
1,429 2,332 7,385
Adjusted income tax expense 4,919 5,547
18,418 18,477
Adjusted net income
$ 9,013 $ 9,154 $
30,375 $ 28,142
Adjusted earnings per share-
diluted
$ 0.12 $ 0.12 $
0.40 $ 0.38
Weighted average common shares
outstanding- diluted
75,557,760 74,982,461
75,094,446 74,707,855 (1)
Includes a gain of approximately $3.6 million, recognized in
September 2016 associated with the settlement of a forward currency
exchange contract entered into in connection with our acquisition
of Tyrrells, as well as foreign currency gains from intra-entity
loans between Tyrrells entities. (2) Includes performance
bonuses and related payroll taxes paid to employees upon the
completion of the IPO, a financial advisory fee paid to an advisor
in connection with the IPO, and legal, accounting, consulting,
printing, filing and listing fees paid in connection with the IPO
process. (3) Includes legal, accounting, printing and filing
fees paid in connection with the Company’s secondary equity public
offering, which closed in May 2016. (4)
Includes legal, accounting, consulting and
ratings agency fees along with severance expenses and integration
costs incurred in connection with our acquisition of the Tyrrells
international portfolio of brands in September 2016, the Oatmega
brand in April 2016 and the Paqui brand in April 2015.
(5) Represents the recognized expense associated with
sign-on and retention bonuses for certain executive hires and
certain recruiting fees. We are permitted to add back expenses of
this type in determining Adjusted EBITDA under the Credit Agreement
governing our term loan. Adjusted EBITDA (as defined therein) is
used thereunder in determining our financial maintenance covenants
and for calculating ratios in our debt incurrence covenants and is
therefore an important measure of our financial performance and our
ability to take certain actions in operating our business.
(6) Represents expenses we incurred in connection with a
distribution paid in May 2015 to members of the former parent
entity of the Company. (7) The table below reflects an
adjustment to income tax expense for the periods presented
associated with addbacks to net income as presented in the table
above.
Three Months Ended Nine
Months Ended September 30, September 30,
September 30, September 30, 2016
2015 2016
2015 Adjustments to net income $ 8,480 $ 13,572 $
13,892 $ 30,052 Less:
Non-deductible equity-based
compensation
883 997 2,599 2,435
Non-deductible IPO, secondary equity
offering, and acquisition-related expenses
4,790 8,967 5,405
8,967 Permanent differences 5,673 9,964
8,004 11,402 2,807 3,608 5,888
18,650
Federal and state statutory rate, net of
federal tax benefit for state tax expense
39.6 % 39.6 % 39.6 % 39.6 %
Adjustments to income tax expense $ 1,112
$ 1,429 $ 2,332
$ 7,385 Amplify Snack Brands,
Inc. Reconciliation of GAAP Selling and Marketing and
General and Administrative (“SG&A”) Expenses to Adjusted
SG&A Expenses (In thousands) Three
Months Ended Nine Months Ended September
30, September 30, September 30,
September 30, 2016 2015
2016 2015
SG&A $ 24,874 $ 21,214
$ 50,239 $ 50,865 Less: Depreciation
expense (91 ) (48 ) (207 ) (61 ) Amortization of intangible assets
(1,279 ) (1,064 ) (3,433 ) (3,165 ) Equity-based compensation
expense (1,803 ) (997 ) (3,972 ) (2,435 ) Founder contingent
compensation - (4,602 ) - (13,805 )
Transaction-related
expenses: IPO-related expenses (1) - (6,715 ) - (9,352 )
Secondary equity offering-related expenses
(2)
- - (615 ) - Acquisition-related expenses (3) (9,024 ) (67 ) (9,498
) (462 ) Executive recruitment (4) - (127 ) - (742 )
Recapitalization expenses (5) - -
- (91 )
Adjusted SG&A $
12,677 $ 7,594 $
32,514 $ 20,752 (1)
Includes performance bonuses and related payroll taxes paid
to employees upon the completion of the IPO, a financial advisory
fee paid to an advisor in connection with the IPO, and legal,
accounting, consulting, printing, filing and listing fees paid in
connection with the IPO process. (2) Includes legal,
accounting, printing and filing fees paid in connection with the
Company’s secondary equity public offering, which closed in May
2016. (3)
Includes legal, accounting, consulting and
ratings agency fees along with severance expenses and integration
costs incurred in connection with our acquisition of the Tyrrells
international portfolio of brands in September 2016, the Oatmega
brand in April 2016 and the Paqui brand in April 2015.
(4) Represents the recognized expense associated with
sign-on and retention bonuses for certain executive hires and
certain recruiting fees. We are permitted to add back expenses of
this type in determining Adjusted EBITDA under the Credit Agreement
governing our term loan. Adjusted EBITDA (as defined therein) is
used thereunder in determining our financial maintenance covenants
and for calculating ratios in our debt incurrence covenants and is
therefore an important measure of our financial performance and our
ability to take certain actions in operating our business.
(5) Represents expenses we incurred in connection with a
distribution paid in May 2015 to members of the former parent
entity of the Company.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161114006451/en/
ICRInvestorsKatie Turner646-277-1228orMediaCory
Ziskind646-277-1232cory.ziskind@icrinc.com
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